Education pension fund bill should be approved

A bill passed in the recently concluded legislative session would bring solvency to the state's pension fund for education employees without asking taxpayers to shoulder more of the load.

Senate Bill 115 has been endorsed by a wide coalition of education groups, teacher's associations, retiree groups and universities, including New Mexico State. It was unanimously endorsed by both the Legislative Education

Study Committee and the Investments and Pensions Oversight Committee before passing the Senate on a 41-0 vote and then on a 54-13 vote in the House.

All that remains is the governor's signature to bring a balanced solution to a problem that will only worsen if left unaddressed.

Employees earning less than $20,000 a year would be protected under the plan. Those making more than that would take a hit to their weekly paychecks and their retirement plans, and current retirees would see a reduction in their cost of living adjustment (COLA).

Contribution rates for employees would increase from 9.4 percent to 10.1 percent in fiscal year 2014 and 10.7 percent in fiscal year 2015. There would be no increase for taxpayers. However, a bill passed in the 2005 session that does increase employer contributions to the fund is contingent on the passing and signing of this bill.

Along with the contribution increase, the plan also raises the retirement age for new members to 55 in order to receive full benefits and decreases the COLA for all members, beginning July 1.

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The COLA reductions would be cut in half once the fund is restored to 90 percent funded, and removed altogether when it reaches 100 funded.

While those changes may be painful for both current and former educators, there is a good reason for the unanimous support of the groups who represent them.

And that is the alternative.

The latest actuarial report on the fund done in June shows that it has $6.2 billion more in liabilities than it has in current assets.

"We have 61 cents in the bank for every $1 in liabilities," said Educational Retirement Board Executive Director Jan Goodwin.

According to the actuaries, the plan will be 101 percent funded by 2043 with the provisions in this bill, Goodwin said.

The ERB has 60,000 active members and 37,000 retirees, ranging from pre-K to high education, many living in Las Cruces and Do a Ana County.

Another bill passed this session, SB 27, deals with the Public Employees Retirement Fund, which covers pension plans for other state workers. The PERA plan would increase taxpayer contributions, though by far less (.4 percent) than the 1.5 percent originally called for, along with hikes to employee contributions, cuts in the COLA and restrictions for new employees.

We think the ERB plan is the better approach, but recognize that both funds need to be restored now before the state finds itself unable to meet its obligations to both current and former employees.